Tropical Depression Florence is now transitioning to a non-tropical weather system, but it‘s still dumping rainfall over North Carolina and Virginia. As the historic rains and flooding slowly ease up along the North Carolina coast and the population is gradually let back into their communities, the insurance industry will now begin to get a better sense of the damage. It should be noted, however, that travel in this general area is still very limited, and it could be days before the first notice of loss is provided for some risks.

The National Geodetic Survey (NGS) has provided its first post-event aerial imagery, which can be found here. They still have yet to fly over the hardest hit areas, but it’s expected that these images will be added over the coming days. Other high resolution images can be found here.

For many, the weekend winds were not the problem as Florence moved slowly across the Carolinas. At this link provides some of the official top wind gusts observed across the multi-state region. The top observed wind speed was 112 mph gust from a Buoy 30 miles south east of Topsail, NC. Onshore the highest wind gust continues to be 105 mph as observed at Wilmington Int’l. Airport.

The wind gusts, however, may only be half of the problem as the long duration of strong winds will likely increase insured losses. A low level wind event of long duration can inflict just as much damage as a shorter and stronger wind gust event. Another thing to consider is that many of our building design codes and vulnerabilities built into the catastrophe models are developed around the gust. This will result in a bit of uncertainty around the loss estimates within the catastrophe models.

Above is a look at the overall event summary of the wind duration in hours of wind gusts of 50+ mph. This is provided by Verisk Weather Solutions and available in BMS iVision.

Broken Rainfall Records
Unfortunately, the rainfall forecast has played out as expected. Numerous locations in southeastern North Carolina have endured more than 20 inches of rain, with Onslow and Carteret counties being hit particularly hard. At least twelve locations appear to have broken the state record for tropical storm or hurricane rainfall, exceeding the 24.09 inches that fell near Wilmington during Hurricane Floyd in 1999.

Here is the selected preliminary storm total rainfall in inches from 2:00 p.m. EDT, Thursday, Sept. 13 to 10:00 a.m. EDT, Monday, Sept. 17. It should be noted that the Elizabethtown, NC total of 35.93 inches is the most for any tropical storm or hurricane along the East Coast north of Florida, and this represents a new 2-day and 3-day rainfall record for North Carolina. However, it does not appear at this time that the 24-hour rainfall record for the state was broken. It’s still likely that higher observation totals could result, as reports are still rolling in. It wouldn’t surprise me to see a total value of around 36 inches eventually being reported. Further south, the town of Loris, SC posted a preliminary total of 23.63 inches, which is a new rainfall record from a tropical system in South Carolina.

Above is a look at the overall rainfall event summary which shows a large area of rainfall values of 12+ inches. This is provided by Verisk Weather Solutions and available in BMS iVision

The river water is starting to recede in some areas, but some areas could see the water level continue to rise as the water moves toward the coast. For example, the Cape Fear River in Fayetteville, NC is already at flood stage and is forecasted to rise to 62.3 feet by Tuesday morning. Water levels along the Lambert River are also expected to rise.

Insured loss
The National Flood Insurance Program (NFIP) will bear the lion’s share of losses, and it’s apparent that a large protection gap exists with the very low NFIP take-up rate that we have previously mentioned. It’s still unclear if this level of flooding will have an impact on the catastrophe bond and reinsurance programs that help the NFIP with recoveries. The various insured loss estimates that have been publicly released from the modeling companies range from $2.5 billion to $5 billion in insured loss.

What Tropical Troubles Are Next?

A recap of the Atlantic basin tropical cyclone outbreak that occurred over the last two weeks via @NHC_Atlantic graphical outlooks. A total of 5 named storms, 3 hurricanes, and 1 major hurricane formed which brings seasonal totals to near average. pic.twitter.com/aKb2SABx7s

I mentioned several times last week that, overall, the tropical troubles in the Atlantic Ocean would be shutting down this week. In fact, today is the first day since August 31 that the Atlantic Basin is not generating ACE (Accumulated Cyclone Energy), which means the basin should have a few quiet weeks ahead. The only area of concern for the insurance industry at this time is the remnants of Isaac, which are located just south of Jamaica. Overall, the chances for formation are very low as the system moves toward the Yucatan Peninsula. Tropical Depression Joyce in the far eastern Atlantic continues to lose organization and should dissipate in a few days.

Although the Atlantic will be quiet for the next few weeks, I don’t think the season is done quite yet. A burst of upward motion could come back into the tropical Atlantic during the first week of October. This would correspond climatologically with typical development originating in the western Caribbean Sea this time of year instead of coming off the coast of Africa.

The figure above shows the named storm points of tropical cyclone genesis from October 1 – 10 between 1851 – 2015. Focus will now shift closer to the U.S. and western Caribbean.

BMS Group Limited (“BMS”), the independent specialist insurance and reinsurance broker, today announces the expansion of its Energy division with four hires. They will report to James Chicken, managing director of Energy and will join early next year.

Lynsey Green brings 20 years of experience to BMS. She joins from JLT, where she focused on North American Energy clients. Green began her career in the Energy division of Aon before moving to the Energy Casualty team at Agnew Higgins Pickering and Company in 1999 and then to Lloyd and Partners (part of the JLT Group) in 2010.

Kevin Page has over 30 years’ industry experience working for Sedgwick, Marsh and Price Forbes. For the past 10 years, he has focused on the power and nuclear sectors for both American and multi-national clients, providing technical insurance coverage analysis, policy wording development and client management at Price Forbes.

Robin Gibbs began his career at JLT in the natural resources team, before joining the power and downstream Energy team at Price Forbes in 2014. He is ACII certified and has a Master’s in economics and international business.

Darren Jones brings 28 years of industry experience to BMS, having begun his career with Marsh’s Marine & Energy division in 1990. In 2002, he became a part of Agnew Higgins Pickering (later JLT), where, among others, he was focussed on UK and US Energy accounts and establishing a Casualty offering for the Energy sector. He joins from Price Forbes, where he was part of the Power, Nuclear and Construction unit since 2010.

Ian Gormley, director of BMS Group, said:

“Sustaining exceptional client focused services is at the heart of our culture, and, as we grow, we continue to attract the industry’s leading talent to our entrepreneurial team. Lynsey, Kevin, Darren and Robin are well respected in their fields and their breadth of expertise compliments the knowledge within our growing energy division. We are a significant step closer to achieving our ambition of building the London market’s leading Energy team. I would like to offer them all a very warm welcome.”

According to the National Hurricane Center, at 7:15 a.m. EDT today, Hurricane Florence made landfall at Wrightsville Beach, NC, just east of Wilmington, NC, the largest city in the area with a population of just over 117,000. Florence came ashore with winds of 90 mph and a central pressure of 958 MB. However, as many in the media have communicated, the storm surge impacts are likely to be similar to a major hurricane at landfall.

Wind Observations
Many areas along the coastline have experienced tropical storm-force winds for over 24 hours now, and by the time Florence moves inland, some areas will have had well over 24 hours of hurricane-force winds. There are numerous reports of wind gusts over 80 mph and a handful over 90 mph. The highest wind gust I have seen reported is 105 mph at the Wilmington, NC airport, which is the second-strongest wind measured at that location in 60 years. The strongest ever recorded was 135 mph during Hurricane Helene in 1958. It should be noted that there could be even higher wind gusts, as all observations at this point are preliminary.

Below is the BMS iVision wind swath provided by Verisk Weather Solutions, which shows the extent of the three-second wind gusts along the coast and how far inland hurricane-force gusts could be observed.

BMS iVision additionally has other severe storm attributes, such as rainfall and wind duration over 50 mph.

At this point, according to poweroutage.us, there are approximately 575,00 power outages reported across North Carolina and South Carolina with the number growing each hour.

Tornadoes
So far, the Storm Prediction Center has only received one report of a tornado. However, as Florence tracks inland, it is expected that tornadoes will become increasingly likely today in the northeastern part of the hurricane. A tornado watch remains in effect for portions of eastern North Carolina.

Surge Observations
Storm surge was expected to be a major problem along coastal areas, as Florence’s slow motion and overall large size allowed for the constant piling up of water along coastal and inland waterways. Although observations of storm surge are preliminary, reports of six feet have been observed in New Bern, NC, which is 30 miles inland along the Neuse River. If the observations are correct, this is approximately two feet higher than the observation during Hurricane Irene in 2011, according to the National Weather Service in Morehead City. Observations of storm surge along the coastal section could be higher, as observations are limited at this time. However, since the worst of Florence came ashore as the overnight high tide was receding, overall maximum water heights may have been reduced.

Insured losses
Overall damage seems to be aligned with the wind speeds that have occurred, such as the occasional gas station awning being damaged, and siding and asphalt shingles being torn off residential structures. The damage could be higher than normal due to the long duration of hurricane-force winds. Along the coastal barrier islands, many structures have first floor flooding. But, keep in mind, many of the coastal structures are designed to flood and are typically only temporary living spaces or used for storage. Thankfully, the overall insured loss estimates are many times less than what was predicted earlier this week. Only a few catastrophe modeling companies have publicly provided loss estimates at this time, which range from $2B to $5B for wind and surge. It should be noted, however, that any loss estimates provided are preliminary, and the insurance industry is accustomed to loss estimates creeping up over time.

Looking Ahead for Tropical Troubles
Florence will slowly track westward into eastern Tennessee by Sunday night. By Monday morning, Florence is expected to be caught up in a trough of low pressure and should quickly move across the Northeast states during the middle of next week, resulting in a swath of 2 to 4 inches of rain along the Appalachian Mountains.

Overall, there has been a fair amount of activity lately. Keep in mind, however, that we are still four days from the actual peak of the hurricane season. It is all downhill from here. As I mentioned at the start of the week, the tropical Atlantic should begin to shut down any new activity in the coming days, but any activity that has already developed will need to be watched closely. The next expected uptick in activity should be the first or second week of October.

The End Game
After tracking over 3,292 miles across the Atlantic Ocean, Florence will become one of only two hurricanes to make U.S. landfall from its origination point off the coast of Africa since 1851. It also becomes the only hurricane since 1851 to make landfall from its location that was observed in the middle of the Atlantic Ocean back on September 6th. For the last 2-3 days, the landfall target has been focused on an area between Myrtle Beach, NC and Morehead City, NC, with the primary area of impact being just north of Wilmington, NC in New Hanover, Pender and Onslow counties.

With Florence’s center core finally showing up in the long range radar, it would appear the end game is finally near. The biggest change in the forecast since the start of the week has been the change in intensity, which is a known issue in hurricane forecasting. There has been some general improvement in skill over the last decade, but more recently over the last five years, intensity forecasting has been challenging.

Annual average official intensity errors for Atlantic basin tropical cyclones for the period 1990-2017, with least-squares trend lines superimposed. Source NHC

As Florence begins to move over the warm waters of the Gulf Stream, will it regain strength? This is unlikely, as the core of the hurricane is finally falling apart due to multiple eyewall replacement cycles, along with dry air and wind shear that have been finishing the job over the last 24 hours. However, because Florence is moving over the warm waters of the Gulf Stream and wind shear is a bit more relaxed, it’s likely that only gradual weakening will occur until its landfall around 3:00 a.m. EDT tomorrow. Shortly after this expected landfall, a more rapid pace of weakening is expected as the center of the storm moves inland into central South Carolina.

Storm Surge Impacts
Hurricane Ike made landfall on the Texas coast 10 years ago this morning. It was only a strong Category 2 hurricane at landfall, but don’t make the same mistake by judging Florence as only a Category 2 hurricane, as disastrous rainfall flooding and storm surge impacts are likely to occur. Based on the NHC storm surge inundation forecast, the storm surge is expected to be between 9 and 13 feet from Cape Fear to Cape Lookout, NC, where the natural concave shape of the coastline will enhance the surge. It appears that the surge will come ashore just after high tide tomorrow, which occurs around 11:30 p.m. tonight with low tide occurring at 5:00 a.m. tomorrow.

Disastrous flooding is expected over wide areas, with the heaviest rainfall amounts coming near the coastal Carolinas. The Central Appalachians could also experience heavy rain over mountainous terrain, and orographic lifting rain will likely trigger mud and rockslides. It still appears likely that the North Carolina state record for rainfall from a named storm – 24.06 inches from Hurricane Floyd in 1999 – will be broken, but it’s unlikely that the greatest 24-hour rainfall record of 22.22 inches will be broken. Because Florence will slow its forward motion after landfall, the large amount of rainfall is a big concern as it all flows to the Atlantic Ocean. The constant onshore flow over the next two days could back up some of the water trying to escape from the inland tributaries.

The National Flood Insurance Plan (NFIP) Take-Up Rate in the Carolinas as a percentage of county housing units is less than 1% for many inland counties, with much of the NFIP risk located at the coastal counties. Even the take-up rates in the highest storm surge impact counties of New Hanover, Pender and Onslow counties is relatively low , illustrating the large protection gap that exists across the Carolinas.

Wind Impacts
Tropical storm-force winds (39-plus mph) are expected to arrive in the hurricane warning area by early this afternoon. Hurricane-force winds (74-plus mph) may arrive by this evening. Even though Florence is expected to be much weaker than initially thought, it does not mean that wind damage won’t occur. Numerous downed trees and long-lasting power outages could occur near where Florence’s center strikes and even further inland. Both Hurricane Ike 2008 and Hurricane Sandy 2012 were large hurricanes in size and had a wide range of impacts.

Another thing to watch with Florence is the relatively slower movement once it makes landfall. Hurricane damage is often associated with peak wind speed. However, an AIR-Worldwide Blog by Dr. Vineet Jain in 2010 suggests that claims data and post-disaster survey findings repeatedly and consistently show that the amount of damage a structure experiences is also a result of wind duration—how long a hurricane’s winds batter a structure. In the end, neither peak wind speed nor wind duration are a favorable scenario for a structure’s ability to endure damage above various design code levels. The cumulative stress load variations from long term exposure to hurricane winds can increase the overall damage potential to a structure beyond just the peak gust endured at a location. However, keep in mind that Category 2 Hurricane Arthur that hit the Outer Banks in 2014 did not register as a Property Claim Services catastrophe event, illustrating how building codes are working and how resilient structures are becoming along the coastline of North Carolina.

BMS iVision allows clients to run risks to better understand various impacts from Florence. This is the newest 3 sec wind speed gust in MPH from Verisk Weather Solutions. Notice the expanding wind swath with the 90 mph wind gust swath extending out 60 miles from the center of the storm.

Tornado Impacts
Yesterday I bought up the risk of tornadoes from landfalling named storms. After doing a bit more research, it seems that the tornado threat from Florence in the Carolinas might be higher than we’re normally accustomed to seeing with landfalling named storms. Florence’s larger and more intense wind field increases low-level shear over a larger area, favoring more tornadoes. See McCaul (1991). Clearly this could add another element to the landfall threat associated with Hurricane Florence and tornado watches are posted.

Power Outages
Given the potential amount of rainfall and tropical storm force-winds that could reach areas well inland, the insurance industry should expect high amounts of tree fall that will produce power outages. The Guikema Research Group at the University of Michigan has now produced power outage maps. As the storm makes landfall, www.poweroutage.us will be a good resource for real-time power outages.

Overall there has been a fair amount of activity lately, but keep in mind that we are two days off the peak of the hurricane season and it is all downhill from here. As I mentioned at the start of the week, the tropical Atlantic should begin to shut down any new activity in the coming days, but any activity that has already developed will still need to be watched closely. The next expected uptick in activity should be the first or second week of October.

The steering currents have collapsed and could exacerbate any and all effects along hundreds of miles of coastline. This is not something the insurance industry wants to hear. It seems counterintuitive, and it is an unusual scenario. Florence will have nowhere else to go but south or along the coastline into South Carolina this weekend.

The best technical description might be from Doug Simonian, a meteorologist at www.nymetroweather.com.

A quick analysis of the 12z Euro today vs the 12z Euro yesterday, both valid 06z Friday. The NW Atlantic shortwave that @antmasiello has mentioned provides N to S flow, which cancels out the S to N flow along the periphery of the W Atlantic ridge, causing #Florence to stall. pic.twitter.com/nhLWkzST1w

So, what does this all mean? The 500mb layer, which is roughly 18,000 feet in altitude and known as our midlayer, is often used to look for steering currents that drive hurricane direction. This has bridged the steering currents to the north, which means Florence has nowhere to go but stall or move southwest. In the short term, it still seems like it is certain that Florence will touch the North Carolina coast near Cape Fear, NC and then drop south. After 72 hours, however, it’s anyone’s guess as to what direction Florence will go, which is why the NHC cone of uncertainty continues to balloon along the coastline.

The last four runs of the ECWMF ensembles guidance that shows a constant step south and slower landfall as Florence approaches the coastline. This is a remarkable turn of events as almost no ensemble members were forecasting a southward component of motion just 36h ago. Now almost every member does. Source: Weathernerds

Over the past day a blend of the best weather models called the TVCN has latched on to the idea that Hurricane Florence may skim the coast of the Carolina’s for 2-3 days before moving inland. The newest model run is the darkest blue. Source: Univ of Albany

The Good: Based on this forecasted track change, the overall inland impact from heavy rains and tropical storm-force winds has diminished greatly for North Carolina. Another potential outcome is that as the storm slows towards the coastline it will create upwelling, causing the storm to weaken and, therefore, unlikely to stay a major hurricane any time after Friday morning when it is near the North Carolina coastline. However, if Florence can stay over water, it will maintain its hurricane structure and could still be at Category 1 or 2 hurricane strength for another day or so. If it moves inland, expect Florence to quickly be downgraded to a tropical storm. Finally, another positive note of a slower moving storm towards landfall or along the coastline is that it would likely draw in dry continental air, thus weakening the storm as it stalls. There are still signs that stronger wind shear will also help weaken the storm as it nears the coastline.

The Bad: The overall winds will still be strong right along the coastline near southern North Carolina and, if the storm tracks along the coastline, it would just put that much more property exposure at risk to hurricane-force winds. The fact that hour upon hours of hurricane force winds could occur can be just as destructive as a short period of higher wind speeds. This also shifts the heaviest rain and flooding along the entire coastline, and major flooding is still expected along the coastal inland areas, with heavier rains now forecasted over South Carolina and maybe even into Georgia.

Population Changes Along The Coastline
The insurance industry is well aware of the exponential growth that has occurred along the coastal areas of the U.S. The graphic below illustrates the population growth between Myrtle Beach, SC and Wilmington, NC in 1940, 1990 and 2018. This rapid increase in the coastal population will increase potential insured losses from both wind and storm surge if Florence decides to track along the South Carolina coastline this weekend versus moving inland as a weaker tropical storm. It should be noted that a large portion of the population in this region has not experienced a hurricane of this magnitude since Hugo in 1989, and very few likely lived in the area during Hazel in 1954, the most recent Category 4 hurricane to impact the region. Thankfully, these analogs are no longer relevant to Florence’s forecast.

Exposure change in region forecast to be affected by Florence. While much of the development has been along the coast, most areas inland are subject to major flooding. Source: Stephen M. Strader

BMS iVision allows clients to run risks to better understand various impacts from Florence. This is the newest 3 sec wind speed gust in MPH from Verisk Weather Solutions. Notice the expanding swath of high winds along the South Carolina coastline.

The newest rainfall guidance suggesting a large area of 20 inches of rain right along the coastline. Fortunately given the new track the impact in the mountains, where orographic lifting could have cause enhanced rain and mudslides is more limited with the newest forecast. Source NOAA/NHC

Storm Surge
There are known impacts of storm surge which are well modeled in the NHC Potential Storm Surge Flooding Maps, the best resource at this time. There is really no good news in this scenario, and the scenarios only get worse. Initially, the storm surge scenario still plays out with the concave shape of the North Carolina coast being a significant contributor to storm surge, which allows water to pool while being directed inland. Therefore, at this time, the worst of the storm surge will likely occur along the southern South Carolina coastline. If Florence stays along the coast, it means hours of onshore winds over multiple tide cycles creating even bigger problems, and if the storm moves down along the South Carolina coast, it will see some even higher water heights. But, the storm surge impacts are highly dependent on the final track.

It is very important to click here for the detail in the storm surge forecast. Source: NHC

To better understand the impacts upwelling might have on Florence’s intensity as it stalls near the coastline, data from Air Launched Autonomous Micro Observer (ALAMO) can be used. These floats are launched out ahead of the storm by hurricane hunters to get observation of the thermal energy in the ocean, which is a prime driver for hurricane strength. As the hurricane passes, the data is collected in real time. Last night, Florence went right over ALAMO floater #9136, which showed substantial vertical mixing of the water column with the water going from 29 degree c to 27.5 degree c. It is this same vertical mixing that will likely weaken Florence along the coastline.

Tornado Risk
There has been very little discussion around the tornado risk from a landfalling hurricane. Currently, the Storm Prediction Center is not indicating any increase in tornado potential. Just last year, five named storms were responsible for 119 reported tornadoes across the U.S. Hurricane Harvey had the largest number of tornado reports with 57, mostly clustered near the southeastern Texas coast as it stalled out. This could potentially happen as Florence stalls near the coastline over the next few days.

Plotted on the map are the tornadoes associated with the hurricanes and tropical storms that affected the U.S. in 2017. Source NOAA Storm Prediction Center

Insurance Loss Guidance
Given the change in forecast, any initial loss guidance has to be thrown out and new events need to be pulled as Florence will likely be a weaker storm. With the forecasted movement along the coastline, it will be challenging to find a scenario that would match a stochastic event out of catastrophe models. There might be events that moved slowly along the coastline in a northeast direction or even stalled like Hurricane Diana in 1984. However, those types of storms are entirely different than a storm that stalls and moves to the southwest along the coastline leaving the strongest winds along the coast versus the weaker winds, which would typically be observed in a northeast moving hurricane.

Other Tropical Troubles
A sneaky tropical storm is likely to be spinning up right before landfall near the southern Texas coastline. This Texas threat is not being well advised at this point, as all eyes are now on Florence. The NHC currently gives this tropical wave a 60% chance for genesis over the next 5 days. Its name would be Joyce if development does occur. At this time, I don’t expect it to become a hurricane prior to landfall, and it should mostly just be a rain event for coastal Texas. However, it’s important to watch.

Now Tropical Storm Isaac, which is currently a tropical storm 450 miles from Martinique, also needs to be watched. Although the NHC does not currently have this as a hurricane, some models are suggesting that Isaac could become a hurricane over the Caribbean. These models also show a risk for it to track into the Gulf of Mexico. This is something to watch moving forward and will depend on Florence’s final movements.

ECMWF ensemble forecast suggesting in the long range that Isaac could track up into the very warm waters of the Gulf of Mexico. Source Univ of Albany

BMS is pleased to announce that we were awarded the title “Broker of the Year” at this year’s highly coveted and prestigious Insurance Insider Honours.

The award ceremony took place on 6th September at Old Billingsgate, London. The “Broker of the Year” category was open to all regulated insurance and reinsurance intermediaries serving the global P&C markets and was awarded to a company that could demonstrate continued incremental business expansion and improvement in turnover, margins and profits over the previous year.

Nick Cook, Chief Executive Officer of BMS Group, said:

“I am very proud to announce that at this year’s annual Insurance Insider Awards dinner, BMS won Broker of the Year. To win is recognition of our hard work, our innovation, our growth and our financial performance. Winning Broker of the Year vindicates our group strategy. We have worked hard to develop our individual and collective excellence, built on the strong foundations of our entrepreneurial and team culture. Every employee across our entire business has contributed to BMS winning. My congratulations to everyone on this outstanding achievement”.

T- 72 hours
Although yesterday I mentioned that Florence is not just a point on a map and will have a wide-ranging impact far away from the center the storm, the center does still matter. With Florence about 72 hours away from its expected landfall around 7:00 a.m. AST on Friday, there is still some uncertainty regarding the exact landfall location. Florence continues to fluctuate in intensity with winds of 130 mph, along with stronger gusts. The diameter of the most destructive winds, known as the radius of maximum winds, is currently only 10 miles, but will likely continue to grow. The plot below is from our BMS iVision application with the Verisk Weather Solutions wind one minute sustained swath. This is only one possible forecast scenario, but it provides an idea of what the wind field could be. This will shift north or south based on the eventual track, with the strongest winds likely being on the right side of the track. If these maximum winds occur over a more populated area, the damage will be much greater. For example, the losses from last year could’ve been a different story if the strongest winds from Hurricanes Harvey and Irma hadn’t just missed the populated areas of Corpus Christi, TX, and Miami, FL, respectively. At this point, the forecast still holds that Florence will make landfall between Myrtle Beach and Morehead City, NC as a strong Category 3 hurricane with winds of 120 mph.

BMS iVision allows clients to run risks to better understand various impacts from Florence. This is the one minute sustained wind in MPH from Verisk Weather Solutions, which shows only a very narrow band (33 miles) of damaging wind speeds.

If Florence comes ashore with winds of 140 mph as previously forecasted by the NHC, this would be above the International Building Code standards, which are the strictest right along the coast. However, hurricane-force winds will likely extend up to 30-60 miles inland, with tropical storm-force winds extending even further. These wind gusts will be strong enough to cause power failures as far north as Virginia and, given that it has been decades since a major wind event has impacted this area, it’s likely that a lot of old, damaged and diseased trees will be cleaned up. These strong winds, combined with the wet soil conditions over the last month, may lead to a high likelihood of wind-related treefall damage.

Unlike areas of south Florida or south Texas, areas along the Southeast coast have a fairly high tree density which will compound potential damage from tree fall and power outages. Experience suggests even from minor hurricanes like Hurricane Hermine that made landfall in 2016 in the Florida Panhandle, higher tree density over an area that has not experienced a hurricane in a while can create major power outages. Source: Max Galka

Flooding Potential
It appears that the forecasted track for the center of the storm and the NHC cone of uncertainty are getting closer together. The primary reason for the slow movement after landfall is a strong blocking ridge of high pressure to the north. This will cause Florence to potentially behave erratically this weekend, similar to what happened with Hurricane Diana off the Southeast coastline in 1984. The major issue with stalling is that a large amount of rain is forecasted to fall. The spread in model rainfall forecasts has increased since yesterday. It is likely that a maximum of 20 inches could fall, but this all depends on how long Florence stalls and what type of orographic influences occur in the more complex terrain further inland. The North Carolina state record of rainfall from a named storm is 24.06 inches from Hurricane Floyd in 1999.

Because of the wetter-than-average conditions recently, dams may not be able to contain the rainfall and areas that have never flooded before will likely flood. Unfortunately, in October 2016, Hurricane Matthew brought heavy rainfall and flooding to North Carolina. The story is the same after every major flood event – many of those affected were without flood insurance. North Carolina is a leader in floodplain mapping and risk communication, and the recent major flooding from Hurricane Matthew provided a reason for consumers to get flood protection. According to the following data, nearly 300 North Carolina towns, cities, and counties increased the number of NFIP policyholders since 2016. Seventy remained steady, and 130 saw decreased participation. Not surprisingly, coastal communities are the biggest participants in NFIP. Most notably, Fayetteville had a whopping 65% increase in the number of policies, albeit only to 1,290 (the 2010 Census documented 87,000 housing units in the city), which still shows a very large protection gap. Other large cities saw increases, including 10%+ increases in Charlotte, Durham, Raleigh, and Greensboro. If there is any good news here, it’s that more flood coverage has been provided and NFIP has reinsurance to aid in its expected losses. However, large protection gaps still remain.

Storm Surge
The NHC has started to issue watches and warnings this morning, and with that they have issued the first storm surge watch for Florence. The combination of a dangerous storm surge and the tide will cause normally dry areas near the coast to become flooded. Surge-related flooding depends on the relative timing of the surge and the tidal cycle, which can vary greatly over short distances. The NHC has now started to issue storm surge inundation maps and they should be watched closely. It’s likely that the current inundation levels of greater than nine feet above ground will likely grow.

There are several reasons why the insurance industry needs to understand the potential loss from Florence. Insurance companies are looking to understand the size of loss relative to their reinsurance placement. They also might be looking to buy top-up covers or 3rd or 4th event covers, if needed. There is also the need to understand where to stage claim adjusters or if third-party adjusters might be needed. The reinsurance industry is keen on triggers of ILW, Cat Bonds and retro needs. There is also an active LiveCAT market for the industry to buy or sell extra capacity. With the understanding that some catastrophe modeling companies usually don’t issue insurance industry loss guidance until about 48 hours before landfall, curiosity often takes people to GIS and the various stochastic track sets to see what potential losses might be. However, Florence’s expected stalling makes event loss selection more challenging, as many of these stochastic track events often move into the Northeast as climatology would suggest. Therefore, only losses from the Southeast should be used to limit losses that might occur from events that track further inland up into the Northeast. Also, given the general cone of uncertainty 85 hours before landfall, the loss ranges can be quite large. This is primarily driven by events that track over more urban coastal areas versus those that track over less populated areas. There are clearly some large loss scenarios with events that could hit Myrtle Beach, SC, and Wilmington, NC, which could easily reach into the billion dollar range. The most extreme loss scenarios at this time are from Charleston, SC, which is slowly becoming an unlikely scenario.

Simple exercise of narrowing down a stochastic track sent from a catastrophe modeling vendor. The events here are based on the model range of landfall, by looking at different storm variables at the time of expected landfall. The light blue tracks are tracks that are not as realistic due to the recurving of the storm after landfall.

Florence is not like most hurricanes. Take the example of Hugo 1989 which has been used as an analog hurricane to Florence. Besides the completely different tracks the speed & rapid intensification right at landfall brought Hugo winds well inland. This will not be the case with Florence which should stalling and dump days of rain. Source: Brad Parovich

Hate Being Wrong
Meteorologists hate being wrong, but with the magnitude of potential disaster that is ahead for the insurance industry this week, I hope I am. I have been working in the insurance industry for the relatively short period of 16 years, but I have also spent a lot of time researching the historical impact of past hurricanes on today’s exposure. I am concerned that what may occur later this week will likely be talked about for decades to come.

Track and Intensity Details
We are now past the point of having to focus on which model is performing best, as the majority of the model guidance is in agreement. It is now time to focus on the fact that Florence is going to make landfall, but the main forecast question now is what will Florence do as it nears the coastline? A blocking high pressure ridge is expected to slow Florence down or potentially even stall the storm. A stalled storm will bring a prolonged period of additional heavy rain (think Hurricane Harvey last year).

Although there will likely be some track shift on the exact location of the strongest winds at landfall, which is a very important detail for estimating insured losses, this detail won’t be known for another 48 hours or more. The overall intensity of the storm will likely influence the final track, and the intensity forecast is just now starting to play out. The loss potential is much smaller if the strongest winds are focused south of Myrtle Beach over the Tom Yawkee Wildlife area than if the strongest winds occurred over Myrtle Beach, SC, Charleston, SC or Wilmington, NC.

After weakening from its Category 4 start last week, Florence is now undergoing rapid intensification, with many of the intensity forecasts showing a range between Category 3 to Category 5 over the next four-day forecast period prior to a potential landfall.

This is all driven by an environment of low wind shear and significant upper-level outflow, which are perfect conditions for building intensity in a named storm. If you add in the fact that Florence will be moving over the very warm waters of the Gulf Stream, which are already as much as six degrees warmer than average, there should be no reason why Florence wouldn’t maintain major hurricane status until landfall. A Category 5 hurricane is becoming likely at some point in the next few days. The only formalities will be internal eyewall replacement that will allow for small fluctuations in strength, but it’s a double-edged sword: a slightly lower wind speed will probably mean a larger sized storm.

Another thing to watch before landfall is an increase in wind shear. Some models are showing this, which would help weaken Florence slightly before its potential landfall. This is something that will be well known in the next day or two, with Florence still likely to be a large damaging hurricane at landfall.

It is too early to provide wind swath estimates, but the ensemble of tracks provide an idea of landfall location with the strongest winds to the right of the storm’s track.

Hurricane intensity guidance

Potential ImpactsStorm Surge
Should some of the intensity forecasts become verified, a Category 4 storm impacting the coastline of the Carolinas would be dangerous and problematic. Although the NHC hasn’t yet begun to issue official surge forecasts, overall the Carolinas’ coastline is particularly vulnerable because of low lying barrier islands, inland waterways and bays that can amplify surge. Because there is uncertainty in the track, the best tool to use right now is the NHC’s Maximum Of Maximum (MOM) storm surge layer, which is an attempt to quantify the potential impacts of storms of different strengths at different angles. This is done by running an ensemble of simulated Category 4 landfall scenarios for a region to get an idea of the maximum storm surge that can occur over various sections of the coastline. It should be noted that this is not a Florence forecast. I expect the NHC to begin issuing better storm surge guidance on Florence by tomorrow.

A Category 4 storm making landfall from the southeast along the South Carolina/North Carolina border could bring surges in excess of nine feet to coastal regions. These layers are in BMS iVision for clients to get a better understanding of maximum impact.

Waves
The force of water can’t be underestimated and, depending on track, waves as high as 15 feet are expected to crash along the coastline and add to the storm surge impact.

The right side of the storm will feature the largest storm surge and highest waves, which puts the area north of Cape Fear at highest risk, with a general predicted surge plus tide of 12-15 ft above mean sea level and 9-12 ft above high tide.

Rainfall and Flooding
Unlike Harvey (in flat terrain), Florence is coming onshore to hilly and mountainous terrain. This will magnify rainfall from orographic lift and runoff will channel into devastating flash/riverine flooding as well as liquefy mountain slopes. The amount of rain will surely impact infrastructure. We have seen time and time again from past flooding events that 10-15 inches of rain over two days is beyond the design capacity of most storm water infrastructure, which creates even more problems beyond flooding on roadways, rivers, creeks and streams.

Based on the government’s quantitative rainfall forecast product, the maximum amount of rainfall that is forecast is more than 15 inches! What makes this even worse is that more rain than usual has fallen during the last 30 days over most of the area where Florence’s heaviest rains are forecast to fall.

The number of inches of rain above (green/purple) or below (reds/yellows) normal over the last 30 days. In much of western Virginia, Maryland and eastern West Virginia, it has been wetter than normal.

With already wetter than normal conditions, the excessive rainfall from Hurricane Florence will…
• Run off more quickly than usual into rivers that are already higher than usual.
• Weaken the soil which could increase tree fall and increase insured loss.

Keep in mind that the models do not do a great job with forecasting rainfall over more complex terrain. In fact, total rainfall forecasts are difficult, period. As an example, days before Hurricane Harvey’s torrential rain began in Houston, the maximum amount forecasted for the region was 29 inches. However, the heaviest actual amount was 60.58 inches!
I expect many rainfall and river level records for the area to be broken, including many set from 1973’s Hurricane Agnes, which caused record flooding in the Mid-Atlantic region with less than 15 inches of rain over Virginia and West Virginia. Again, let’s hope that the government meteorologists are wrong with the forecasted rainfall amount of 15 inches from Florence.

NOAA rainfall forecast for Florence with up to 15 inches of rain forecasted over the next 7 days. Also, watch the tropical system along the Texas coastline as a rain maker.

Power Outages
Given the potential amount of rainfall and hurricane-force winds reaching areas well inland, the insurance industry should expect high amounts of tree fall that will produce power outages. In the past, the Guikema Research Group at the University of Michigan has produced power outage maps. I contacted them and they will be running their model today, but www.poweroutage.us will be the source to watch as Florence makes landfall.

Building Codes Matter
The importance of strong, well-enforced building codes was clearly demonstrated with the hurricanes of 2017. The Insurance Institute for Business and Home Safety (IBHS) provides technical guidance to inform and improve model building codes, advocates for timely adoption of national model building codes and standards, and encourages uniform enforcement of these codes. In its “Rating the States” report, South Carolina scored among the highest states in the country and North Carolina was just slightly lower. However, as we saw with Hurricane Irma and Florida, (one of the highest scored states in the country), building codes are important to limit damage but are a minimum requirement. The expected winds from Florence will likely be at or above the codes that are enforced.

Insured Loss
The catastrophe modeling companies won’t be issuing any stochastic model guidance until roughly 48 hours before landfall so, currently, the best loss analysis would involve one’s own event selection or historical loss simulations. The range in historical loss simulation is quite large due to individual storm tracks relative to the exposed areas, which will ultimately influence Florence’s loss as well. On the higher end of the loss scenarios are Hugo 1989 and Hazel 1954, which each surpass $20B of insured losses for wind and storm surge. Other scenarios are below this $20B of insured loss, but with lower intensity and landfall with the highest winds impacting less populated regions. It should be noted that none of the historical storms stalled like Florence is expected to do and do not account for flood related losses. The forecasted impact to the insurance industry will continue to be refined over the next few days, and those details will be shared in future BMS Tropical Updates.

In case you’re wondering what a category 4 storm surge looks like along the South Carolina coast. This was Garden CIty after Hugo in 1989. GC is 50 miles north of where Hugo made landfall. The storm surge was 14 feet. #scwx#ncwx#Florencepic.twitter.com/t1nX55ekh0

Other Issues Tropical Troubles
While U.S. interests are focused on Hurricane Florence, Hawaii is under threat from Hurricane Olivia. Hurricane Isaac is intensifying further south, with impacts to the Lesser Antilles by late in the week as a weak hurricane. Hurricane Helene is also in the Main Development Region and will likely recurve later this week. Another area to watch later this week is a tropical system that may move up into the Texas coastline. There is a chance that we could have as many as five simultaneous Atlantic named storms this week. The record for active simultaneous Atlantic named storms is four, which was set several times, and the record for named storms including tropical depressions is six, set in September of 1971. Hopefully, we won’t see that occur, since the Basin is now starting to shut down any new development for the next several weeks.

Lions Gate is led by Brett Field and will maintain its distinct character as a wholesale broking operation, operationally and structurally separate from the niche specialist broker BMS Australia, led by Andrew Godden. Lions Gate’s core business will continue to be Lloyd’s-supported liability and property placements, particularly in the construction, sport and hospitality areas as well as hard to place business.

Brett Field, managing director, Lions Gate, said:

“We are very pleased to announce the rebrand to Lions Gate, which will retain focus on our independent retail broking and underwriting agency partners. Our wholesale operation in Australia has earned a terrific reputation, combining local service, product innovation and expertise with direct access to Lloyd’s and the London market. We have ambitious growth plans in the sector and look forward to growing our partnerships in the region.”

There are limited reports of damage near the location of Gordon’s landfall. Current damage reports in Louisiana, Mississippi, Alabama, and Florida indicate only minor coastal flooding, power outages affecting up to 29,000 people and damaged trees. The insured losses from Gordon should be relatively limited due to the overall small concentration of high winds which were mostly on the right side of the center of the storm as it made landfall near the Louisiana/Alabama boarder on Monday night. The maximum sustained wind speeds at landfall were 70 mph, which is just shy of Category 1 on the Saffir-Simpson hurricane wind scale. Because Gordon was not a Category 1 hurricane at landfall, the major risk modeling companies will not be issuing any loss guidance, but losses should be lower than after Hurricane Nate, which impacted the same general area in 2017. The most severe damage seems to be mostly confined to coastal islands like Dauphin Island, AL, which have strict frame building codes and likely high wind deductibles. But seeing even minor damage to some of these structures suggests the properties are very vulnerable to wind and surge, and that it’s only a matter of time before the landscape changes, similar to what has been observed on the Bolivar Peninsula in Texas after Hurricane Ike in 2008.

BMS iVision allows clients to run risks to better understand various impacts from Gordon. This is the 3 sec wind gust in MPH from Verisk Weather Solutions, which shows only a very narrow band of damaging wind speeds.

Florence’s Future
As I mentioned in Monday’s post, there is a high degree of uncertainty in the long-range track for Florence. This is the very reason why the National Hurricane Center (NHC) only issues a five-day forecast, and even its five-day forecast, which is historically one of the most skillful, still has an error of 198 miles. Only 60-70% of the time, the track of the storm can be expected to remain within the NHC cone of uncertainty. Therefore, it is far too soon to speculate what, if any, impact Florence may have on the U.S. East Coast next week.

What a difference one day makes. Animation of Hurricane Florence one day yesterday and today. Strong southwesterly shear has disrupted the circulation significantly.

Florence continues to fluctuate in intensity and, amazingly, it popped to a Category 4 hurricane yesterday in very hostile conditions. Today, however, those unfriendly conditions are impacting Florence’s strength, as it is currently down to a small Category 2 storm. As mentioned previously, the weaker Florence is, the more likely it will stay on a westward track. In fact, the animation below shows Florence tracking through an area of dry, dusty air known as the Saharan Air Layer (SAL), but still maintaining its intensity as it moves in a more northwest direction.

Above is the latest wind shear analysis suggesting the wind shear that Florence has been fighting over the last day is affecting the structure of the storm. The wind shear is expected to subside in a few days, allowing Florence to strengthen.

The various forecast model ensembles are currently the best tool to understand the forecast uncertainty. In the short term, the forecasts are usually very good, with only an error of few hundred miles. In the case of Florence, what happens beyond five days is anyone’s guess. Currently, the spread from these various ensembles is HUGE, showing possible tracks from Florida to Newfoundland. However, over the last several days, there is growing confidence in the ensemble forecasts that Florence will track westward – a growing threat to the East Coast of the U.S. But, the ensembles are exhibiting a high spread in all directions. The source for much of the uncertainty is a possible inflection point that could occur on Sunday as a trough of low pressure passing to the north could provide an escape route for Florence. If the storm misses this trough of low pressure, the chance of eastern U.S. impact increases, as a strong ridge of high pressure blocks any possible escape to the north and allows Florence to track westward until late next week.

My favorite site to track the probabilistic ensemble spread is the University of Albany, which also has tools to track current model skill. Currently, the TVCN (Variable Consensus) model is the best forecast to watch. Click here for latest morning model run of ECMWF everyday (shown above). Click here for latest afternoon model run of the ECMWF everday (Usually available after 4 pm CDT). European Centre for Medium-Range Weather Forecasts (ECMWF). Notice how the probability is high (red colors) up to 72 hour forecast. Probabilities along the coastal U.S. are still below 30% (Blue Colors), but increasing.

One interesting short-term observation in regard to Florence is that it has persistently tracked on the north/east envelope of the ECMWF guidance. Models are indicating a left turn near 26 degrees north latitude tomorrow, which will be very important to the future track and might limit Florence getting caught in the passing trough of low pressure to the north. But, the track in the models has been biased to the west, which is why Sunday movement is key to the future insurance impact along the East Coast of the U.S and Bermuda.

The other tools that can utilized at this time are historical storm tracks and climatology. Never in the history of the Atlantic Basin track set has a named storm in Florence’s current location ever reached the U.S.

The past does not necessarily predict the future, but it’s worth noting that only one named storm out of 89 within 200 miles of Florence’s current position have ever affected the East Coast of the U.S. If Florence does, it would be rather unique.

The same analysis suggests that of the 220 historical storms that have tracked within 200 miles of the NHC five-day forecast location south of Bermuda, only a handful have reached the U.S., with even fewer being notable events like the 1933 Chesapeake – Potomac Hurricane.

Caption: There have only been five hurricanes out of 220 within 200 miles of Florence’s five-day forecast position that have impacted the U.S East Coast.

In summary, the current shear is forecasted to take its toll on Florence. I expect that once Florence tracks through the high areas of wind shear, the combination of much warmer waters in the path of the hurricane will strengthen and expand the storm. Expect Florence to be stronger in intensity and a much larger sized storm as it moves closer to Bermuda, the location that has the highest probability of impact given the various forecast ensembles.

The Parade Continues
The NHC continues to watch for development of soon-to-be named Helene, which is currently centered several hundred miles WSW of the Cabo Verde Islands and has a 90% chance of named formation over the next five days. The cloud mass now coming off of Africa has the potential to be Isaac with a 50% chance of named storm formation during the same timeframe. As I have been saying, these two system have a high likelihood of tracking west across the Atlantic, where conditions are more conducive for strengthening, and could threaten the Caribbean and coastal U.S. in two weeks. But, there are signs that after later next week any new activity should start to wane across the Atlantic Basin. The heart of this hurricane season might only be what develops over the next week as the end of the month looks quiet.